What You Need to Know about Senior Travel Insurance

10 Myths about Auto Insurance

Auto insurance is one of those things that has been around forever, yet most people still don’t fully understand it. All the numbers and jargon can make the subject very confusing and even intimidating to those who aren’t familiar with it. Here are ten auto insurance myths and facts you should know in order to get a better understanding of what auto insurance really is, what purpose it serves, and how you can use it to your advantage as an owner of a car or other motor vehicle.

No. 1: If I don't want to use my car, I don't need auto insurance

Many people think they can save money on insurance if they keep their cars off of public roads. But that's not true. In most states, you are required to have auto insurance as long as you own a vehicle -- even if it doesn't run and is sitting in your driveway. Make sure to get coverage for all vehicles you own or risk having your registration revoked and fines levied by your state's Department of Motor Vehicles (DMV). You also might lose some discounts from your auto insurer, so make sure to ask when applying for coverage what could happen if you forget to list certain vehicles on your policy. Also keep in mind that many drivers' policies include a clause requiring drivers to inform their insurer within 30 days after an accident, even if they were not at fault. If you do not contact your insurer, then they may find out later and cancel your policy due to fraud. So be honest with yourself: If a friend or relative needs a ride somewhere, are you willing to offer one? The chances are good that yes is the answer. So do yourself -- and everyone else who relies on you for rides -- a favor: Get insured!

No. 2: Insurance policies are exactly the same, regardless of price

Just because you pay more for your auto insurance doesn’t mean that you get better coverage. Each company has its own underwriting rules and takes different factors into account when figuring out how much to charge an individual customer, so two policies with similar prices can actually cover completely different losses. The bottom line is: You don’t necessarily get what you pay for in insurance—and, in fact, sometimes getting less is a good thing. In other words, even if you have a premium-priced policy covering $100,000 of damage per accident or whatever else, there may be ways to reduce your exposure without reducing your liability protection by choosing cheaper options within that policy. For example, at State Farm® we offer discounts for adding security features like alarm systems (State Farm branded) and additional living expense benefits for those who need help making their home livable after it's been damaged (homeowner's edition). These features will often save customers money in premiums. If someone wants higher limits of protection they can still opt-in but those buying high limits won't have it forced on them either.

No. 3: I can choose any company I want, regardless of whether they have good reviews or not

It can be tempting to look for a new car insurance company as soon as your premiums go up. However, auto insurance companies vary greatly in their prices and how much coverage they offer. Selecting a company based on price alone may not be smart, especially if that company doesn’t cover an important part of your policy or has poor reviews. To find an insurance company that suits you best, it’s best to do your research online. Review sites like InsureMe compare cheap car insurance quotes from companies across Canada so you can choose one that fits your needs and budget. Before you sign on with a new car insurance provider, read over their policies and speak with one of their customer service representatives to ensure they meet all of your auto insurance needs. Once you have selected a few options, plug them into InsureMe’s comparison tool to get quick rates. If you happen to know someone who is already insured by any of these companies, ask them if they would recommend their insurer. Word-of-mouth is still one of the most effective ways to determine whether an insurance provider is trustworthy—and unlike online reviews, information shared by people we know tends to be truthful and unbiased. You should also check whether a company is licensed with regulators in your province.

No. 4: All companies charge the same rates for similar cover

Many people believe that all auto insurance companies charge similar rates for very similar cover, but that's not always true. For example, some insurance companies provide you with a discount if you use your car only on weekends or during certain months of the year. The discounts make it easier to lower your monthly premiums while still having reliable coverage in case of an accident. So, one way to save money on your auto insurance is to compare rates from different providers and choose a company that offers a discount for driving habits that make you safer on the road. It could even save you up to 30% off your annual premiums! When shopping around for affordable auto insurance, focus on service and claims history instead of price alone. If a company has done little to help customers after they've been involved in accidents or other claims, chances are their level of service won't be there when you need them most. On top of that, poor customer service leads to more negative reviews—which will also impact how your business is perceived by potential customers looking at your business profile online.

No. 5: I don't have to insure my bike/car if it's only in storage

Motor vehicle insurance needs to be maintained at all times. If you don't have collision or comprehensive coverage, you might not get enough cash to buy a replacement car if yours is totaled in an accident while parked. Plus, insurance companies will find out and they could drop your liability coverage if they discover that your vehicle was uninsured when it was involved in an accident. This is important because most states require drivers to carry liability insurance -- and even minimum liability limits are usually far lower than what it would cost to replace a car. Allstate says that for most states, minimum coverage needs to be around $25,000. So, let's say your covered vehicle gets into an accident with another driver who doesn't have insurance. If there's only $5,000 worth of damage to his vehicle and you've got just $25,000 in coverage ... there's a good chance he'd sue you for additional compensation down the road. And depending on how much it costs to repair his car (plus his attorney fees), he could win quite easily -- which means you'd be on the hook for all of those costs. So always keep your policy up-to-date! For more information check out our Auto Insurance Coverage Center. Want more info? Head over to our auto section.

No. 6: Using public transport is a cheaper alternative to buying my own car.

While public transport can save you money on your car payments, insurance, and maintenance costs, it doesn’t mean that you won’t have to spend any money at all. Even if you don’t buy a car, chances are high that you will still have to pay for parking or gas. Instead of buying a second car and paying for public transport, buy a cheaper used vehicle or a motorcycle instead and use your savings to cover gas costs. It might not be as convenient, but if it saves you from hefty monthly payments it will still be worth it in the long run. Also, consider these scenarios before writing off public transportation: Say you live in an area with unreliable public transportation—if there is no way for you to get around without driving then perhaps purchasing a second car isn’t such a good idea after all. Likewise, say you commute via bus each day—but it only runs once every hour; this means that sometimes you'll have to wait over half an hour just to catch one ride home (that's wasted time and energy). If public transportation is out of your budget, then maybe taking the bus isn't so bad after all...just make sure there's a direct route available first!

How do I avoid auto-insurance scams? Just like you would never give your credit card number to a stranger, it’s also not a good idea to give an insurance agent your information without first verifying that they are who they say they are. Before calling an 800 number or emailing anyone at the big insurance company, call your agent and confirm that he or she has not recently changed jobs. Also, contact your state insurance department to make sure that there aren’t any reported complaints against them (though no complaints isn’t necessarily a good sign either—beware!). Finally, if you get any voicemails from someone claiming to be an insurance salesman looking for discounts on your premiums and don't recognize their phone number...just hang up!

No. 7: Buying a brand new car is cheaper than insuring an old one.

This is a myth because depreciation of your car accounts for more than half of what you pay for auto insurance. So, if you drive an old clunker with lots of miles on it and want to save money on your insurance, buy it from a private party or rent one when you go on vacation. You might even be able to convince family members to loan you their cars so that they can have access to them while they’re in storage. Some auto insurance companies even offer cheaper rates if you have a guaranteed clear title, so make sure yours doesn’t have any liens or other things hanging over it. Just having too many claims will increase your premium, so watch out for that too. If you cause an accident, contact the police as soon as possible (even if someone else does). A police report protects everyone involved by documenting property damage and also determines who was at fault (or how much blame should be shared between parties). Even though minor accidents aren’t usually costly (or worth going to court over), a record of everything helps determine how much each person should contribute. Additionally, proving later on exactly what happened at fault can protect you from those he said/she said types of arguments – but only if there's proof! So don't forget to file a police report immediately after an accident; it's easy nowadays thanks to mobile technology.

No. 8: You can't get better coverage if you're under 25 years old.

You don't have to buy your insurance from your state's department of motor vehicles (DMV). You can shop around and compare prices to find an insurance company that fits your needs. And, while many car insurance companies won't cover you until you're 25, they'll let you get on their parents' policy at a much younger age. This way, you can get coverage right when you need it without paying more than necessary in premiums. You might also consider looking into a new kind of auto insurance called pay-per-mile or usage-based insurance. It could save you even more money if you only drive your car 10 miles per day or less: Allstate charges $5 per month with their usage-based program Allstate DrivewiseTM in Texas, for instance, plus 41 cents per mile driven over 6,000 miles annually—which is just 21 cents per mile driven over 6,000 miles annually! If you normally travel less than 6,000 miles per year (commuting 5 days/week), then these rates are considerably lower compared to traditional rates for older drivers who want full coverage for liability & collision damages.

No. 9: 'It makes sense to take out multiple policies with different companies at once.

This is a quick way to confuse yourself, and it probably won't save you any money. In fact, if you get into an accident while under multiple policies with different companies (and then file claims on all of them), it will probably just add to your problems. If you're in an accident, call one company first and explain what happened; they'll take care of contacting any other companies involved in your claim. Similarly, don't bother trying to figure out which auto insurance policy offers better discounts or which has a lower deductible: Often it doesn't matter—the best coverage for you depends on where you live, how much experience you have driving, and so forth. Instead of trying to cherry-pick between policies at once, start by deciding how much coverage you need—but before choosing any specific plan, read up on how each type works: The nuances can make all the difference in getting value from your policy. Take an umbrella liability policy as an example: It sounds like additional protection but may not be worth paying for. Ask yourself: Am I financially stable enough that filing another small claim against me would cause major financial hardship?

No. 10 (and the biggest myth): Never claim - never pay

The first myth is that if you ever make a claim on your insurance, no matter how small, your premiums will go up. This simply isn’t true: aside from some minor exceptions for very serious claims, insurers don’t increase premiums for every claim you make. If they did, nobody would bother to take out insurance at all. The amount by which your premium increases after a claim depends on a number of factors and varies from one insurer to another. More importantly, it’s important to realize that claiming won’t always cost you more in future years – but not claiming could definitely end up costing you. It all comes down to risk versus reward – what price do you put on feeling protected? The bottom line is that putting up with injury or repair costs because you can’t afford them now doesn’t make financial sense. Making sure your car has full cover helps protect its value over time, too. It might be worth making a claim - if it wasn't, there wouldn't be any point in having insurance in the first place!